As the employment market continues to tighten in developed economies, we will see the balance of power shift from employers to employees. Companies need to change how they work to make themselves employers of choice for workers.
These issues are explored in this week's edition of The Economist (22nd September 2018), in their regular column on the world of work, Bartleby. The column does a great job of setting out the problems that are driving a need for change.
Historically low levels of unemployment give workers more comfort in quitting their job voluntarily to look for a new one, especially in high turnover industries like hospitality. Bartleby notes that in the US, the proportion of workers moving on voluntarily is at a 17-year high.
There are very significant costs for businesses in replacing employees. At Workio we often refer to a broad study by Oxford Economics which arrived at an average cost of £30,000. Bartleby references a Deloitte study focused on high-skilled workers which comes to a cost of $121,000. Both estimates include direct costs of recruiting activity, management time spent in the recruitment process, and lost productivity in the changeover from experienced employee to new recruit.
An astonishing two-thirds of the 24% turnover rate in the US software sector in Q2 2018 was voluntary. The cost to the sector is vast, and in an already tight labour market such a high turnover rate has real implications on what can be achieved by companies with such a handicap.
Bartleby suggests some approaches to help companies hold on to their employees for longer - higher pay, "convincing" employees that their employer has a positive social impact, and monitoring to see which employees are most likely to churn out of companies and take action to stop them doing so. One way to do the latter is covert measurement of the speed with which new employees pick up the vocabulary of their employer.
These suggestions fall into the usual trap of taking an overly mechanical view of the problem. Pay is an input to a system, to be optimised assuming your employee is the imaginary homo economicus who can be swayed by a 3% pay rise. The social mission of a business is not something real to be demonstrated, but something employees should be "convinced" of - some kind of con trick or sleight of hand. Monitoring is again a mechanistic take - measure which cog is out of alignment so that it can be realigned to keep the machine humming.
At Workio, we agree with the challenges Bartleby identifies, and the causes they set out. However, we'd add that in a tightening immigration climate in much of the developed world, especially in the UK and US, these challenges will be made even worse in the coming years.
Our solution to the problem of employee churn is all about culture. We think this is the key - managers and leaders knowing what their company culture really is, trying to improve it over time, and finding employees who will enjoy working in their company culture. Of course, we think that Workio is the best way to do that.
To Bartleby's credit, in the end they suggest an old-fashioned chat might be better than Orwellian monitoring, bullshit 'inclusive growth' initiatives to lie to employees about higher purpose, or econometric pay optimisation.
In our view, this misses the opportunity for ethical and open use of robust data to measure and improve company culture. No monitoring, no guesswork, no initiatives that employees don't believe or care about. Understand employees by asking them clear questions, gathering data anonymously and responding to their needs and concerns. This is Workio's own mission - to make work better, for employees and companies.
Companies who take this approach will be at a massive advantage against those who do not, and the employees of today and tomorrow deserve nothing less.